{"id":3918,"date":"2025-04-04T15:41:30","date_gmt":"2025-04-04T15:41:30","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=3918"},"modified":"2025-07-09T15:19:28","modified_gmt":"2025-07-09T15:19:28","slug":"pay-transparency-reduces-compensation-differentials","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/","title":{"rendered":"Pay Transparency Reduces Compensation Differentials"},"content":{"rendered":"<p>By <a href=\"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/\" target=\"_blank\" rel=\"noopener\">Daniel Butcher<\/a><\/p>\n<p>Pay transparency can lead to pay compression, in which employees\u2019 compensation\u2014regardless of whether they\u2019re long-tenured or new, high-performing or just sliding by\u2014tend to cluster around an average or median level for a particular role.<\/p>\n<p>Academy of Management Scholar <a href=\"https:\/\/www.aom.org\/today\/peter-bamberger\/\" target=\"_blank\" rel=\"noopener\">Peter Bamberger<\/a> of Tel Aviv University said that people perceive their employer\u2019s compensation structure to be unfair tend to leave the organization. In those cases, pay transparency can interfere with employee retention goals. But he\u2019s found in his research that pay can be a moving target, where pressure to recruit can drive up new hires\u2019 compensation, higher than longer-tenured employees serving in similar roles.<\/p>\n<p>\u201cIt\u2019s important to see what the impact of pay transparency is on individual behavior, but we also want to see what happens with turnover rates at the firm level,\u201d Bamberger said. \u201cThe argument was based on several research papers in economics in particular with consistent findings that when pay becomes more transparent, it also becomes more compressed.<\/p>\n<p>\u201cEssentially, managers differentiate between stars and poor performers less and give everybody more or less the same or a similar raise and bonus,\u201d he said.<\/p>\n<p>While the economists didn\u2019t really look at the mechanism as to why that is, Bamberger and his colleagues did examine that and came up with a theory to explain the trend.<\/p>\n<p>\u201cThe argument is that managers are kind of lazy, and they prefer not to have to deal with an employee coming in and demanding that they deserve more than someone else,\u201d Bamberger said. \u201cSo when pay is transparent, regardless of differences in individual contribution, they just give everyone the same level of pay increase or bonus.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Daniel Butcher Pay transparency can lead to pay compression, in which employees\u2019 compensation\u2014regardless of whether they\u2019re long-tenured or new, high-performing or just sliding by\u2014tend to cluster around an average or median level for a particular role. Academy of Management Scholar Peter Bamberger of Tel Aviv University said that people perceive their employer\u2019s compensation structure [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":4626,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20,73,77,78],"tags":[],"sp_smart_badges":[],"ppma_author":[70],"class_list":["post-3918","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-careers","category-gender","category-pay","category-policy"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pay Transparency Reduces Compensation Differentials - Academy of Management Today<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Daniel Butcher\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/\"},\"author\":{\"name\":\"Daniel Butcher\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/d1297a59039d9ca7bac9d9f0952e508c\"},\"headline\":\"Pay Transparency Reduces Compensation Differentials\",\"datePublished\":\"2025-04-04T15:41:30+00:00\",\"dateModified\":\"2025-07-09T15:19:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/\"},\"wordCount\":286,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/man-accepts-envelope-from-colleague.jpg\",\"articleSection\":[\"CAREERS\",\"GENDER\",\"PAY\",\"POLICY\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/pay-transparency-reduces-compensation-differentials\\\/\",\"name\":\"Pay Transparency Reduces Compensation Differentials - 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Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer\\\/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications\u2019s InvestmentNews and Crain\u2019s Wealth, eFinancialCareers, and Arizent\u2019s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor\u2019s degree, Cum Laude, from the University of Colorado Boulder and his master\u2019s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.\",\"sameAs\":[\"https:\\\/\\\/aomtodayprod.wpenginepowered.com\",\"https:\\\/\\\/www.linkedin.com\\\/in\\\/danielbutcher\\\/\"],\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/author\\\/daniel-butcher\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Pay Transparency Reduces Compensation Differentials - Academy of Management Today","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/","twitter_misc":{"Written by":"Daniel Butcher","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/#article","isPartOf":{"@id":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/"},"author":{"name":"Daniel Butcher","@id":"https:\/\/www.aom.org\/today\/#\/schema\/person\/d1297a59039d9ca7bac9d9f0952e508c"},"headline":"Pay Transparency Reduces Compensation Differentials","datePublished":"2025-04-04T15:41:30+00:00","dateModified":"2025-07-09T15:19:28+00:00","mainEntityOfPage":{"@id":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/"},"wordCount":286,"commentCount":0,"image":{"@id":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/#primaryimage"},"thumbnailUrl":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg","articleSection":["CAREERS","GENDER","PAY","POLICY"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/","url":"https:\/\/www.aom.org\/today\/pay-transparency-reduces-compensation-differentials\/","name":"Pay Transparency Reduces Compensation Differentials - 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Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer\/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications\u2019s InvestmentNews and Crain\u2019s Wealth, eFinancialCareers, and Arizent\u2019s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor\u2019s degree, Cum Laude, from the University of Colorado Boulder and his master\u2019s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.","sameAs":["https:\/\/aomtodayprod.wpenginepowered.com","https:\/\/www.linkedin.com\/in\/danielbutcher\/"],"url":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"}]}},"authors":[{"term_id":70,"user_id":4,"is_guest":0,"slug":"daniel-butcher","display_name":"Daniel Butcher","avatar_url":{"url":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp","url2x":"https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/01\/DanButcher_Academy-of-Management.webp"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"rttpg_featured_image_url":{"full":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",1000,667,false],"landscape":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",1000,667,false],"portraits":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",1000,667,false],"thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague-150x150.jpg",150,150,true],"medium":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague-300x200.jpg",300,200,true],"large":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",800,534,false],"1536x1536":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",1000,667,false],"2048x2048":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague.jpg",1000,667,false],"owl_elementor_thumbnail":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague-600x400.jpg",600,400,true],"owl_elementor_team":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague-350x450.jpg",350,450,true],"owl_elementor_testimonial":["https:\/\/www.aom.org\/today\/wp-content\/uploads\/2025\/04\/man-accepts-envelope-from-colleague-100x100.jpg",100,100,true]},"rttpg_author":{"display_name":"Daniel Butcher","author_link":"https:\/\/www.aom.org\/today\/author\/daniel-butcher\/"},"rttpg_comment":3,"rttpg_category":"<a href=\"https:\/\/www.aom.org\/today\/category\/careers\/\" rel=\"category tag\">CAREERS<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/gender\/\" rel=\"category tag\">GENDER<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/pay\/\" rel=\"category tag\">PAY<\/a> <a href=\"https:\/\/www.aom.org\/today\/category\/policy\/\" rel=\"category tag\">POLICY<\/a>","rttpg_excerpt":"By Daniel Butcher Pay transparency can lead to pay compression, in which employees\u2019 compensation\u2014regardless of whether they\u2019re long-tenured or new, high-performing or just sliding by\u2014tend to cluster around an average or median level for a particular role. Academy of Management Scholar Peter Bamberger of Tel Aviv University said that people perceive their employer\u2019s compensation structure&hellip;","_links":{"self":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/comments?post=3918"}],"version-history":[{"count":0,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/posts\/3918\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media\/4626"}],"wp:attachment":[{"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/media?parent=3918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/categories?post=3918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/tags?post=3918"},{"taxonomy":"sp_smart_badges","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/sp_smart_badges?post=3918"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.aom.org\/today\/wp-json\/wp\/v2\/ppma_author?post=3918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}